Why De Beers paused a $2.2-billion diamond mine amid the global slump

Why would a company pause a mine after investing $2.2 billion? The answer lies in falling diamond prices, weaker global demand, and a rapidly changing jewellery market

  De Beers, the world's largest diamond producer by value, has paused production at its Venetia mine in South Africa for two years. The decision comes as natural diamond prices remain under pressure, jewellery demand stays weak, and miners struggle with excess inventories across the supply chain.

 

The Venetia mine accounts for around 40 per cent of South Africa's diamond production and represents about 10 per cent of De Beers' global output. Although De Beers spent about $2.2 billion developing an underground mine to access deeper diamond deposits after the open pit was exhausted, weak market conditions have prompted the company to pause production.

   

Why did De Beers halt the mine?

 

The decision reflects several pressures that have built up across the natural diamond industry over the past few years. Main reasons include:

 

• Rough diamond prices remain well below their 2022 highs
• De Beers, along with traders and manufacturers, is carrying excess inventory
• Weak jewellery sales have reduced demand from diamond cutters and polishers

 

Continuing to mine more diamonds would only add to an already oversupplied market and put further pressure on prices. Instead, De Beers is attempting to balance supply with demand while reducing costs until market conditions improve.

 

How is China connected?

 

China has traditionally been one of the world's largest markets for diamond jewellery, accounting for nearly 14 per cent of the global diamond market by revenue in 2024. The country's diamond market generated an estimated $5.72 billion in revenue last year, with jewellery and ornaments making up more than 96 per cent of demand.

 

However, consumer confidence in China has weakened in recent years, leading many households to cut back on discretionary spending, including luxury purchases. At the same time, many consumers have increasingly favoured gold and other investment assets over diamond jewellery. In 2025, investment in gold bars and coins rose 35.1 per cent, as consumers increasingly turned to gold as a safe-haven investment over diamond jewellery.

 

As jewellery sales have slowed, retailers have placed fewer orders for polished diamonds. Those lower orders have gradually travelled back through the supply chain, eventually reducing demand for rough diamonds produced by miners such as De Beers.

 

How is India connected?

 

India is the world's largest diamond processing hub, with cities such as Surat and Mumbai cutting and polishing around 90 per cent of the world's rough diamonds by volume. According to the 2025 De Beers India Diamond Acquisition Study, India has also emerged as the world's second-largest diamond jewellery market, accounting for a 12 per cent share of global demand, reflecting its growing importance in the industry's value chain.

 

However, weaker jewellery demand in China and several other markets has left Indian exporters holding large stocks of unsold polished diamonds. Reflecting the slowdown, India's cut and polished diamond exports fell 8.5 per cent year-on-year to $12.16 billion in FY2025-26, the lowest level in more than two decades. As inventories have risen, many Indian manufacturers have reduced purchases of new rough diamonds because they first need to clear existing stock.

 

Lab-grown diamonds add further pressure

 

Natural diamonds are also facing growing competition from lab-grown diamonds, particularly in the affordable jewellery segment. These stones are chemically and physically similar to natural diamonds but cost significantly less, making them increasingly attractive to consumers. While demand for natural diamonds remains weak, India's polished lab-grown diamond exports grew 1.98 per cent year-on-year to $194.78 million during April-May 2026 despite a challenging global environment.

 

Interestingly, India and China are not only key players in the traditional diamond supply chain but have also become major producers of lab-grown diamonds. This means both countries sit at the centre of the industry's existing value chain as well as one of its biggest competitive disruptions.

 

Why pause a newly developed mine?

 

At first glance, it may seem surprising that De Beers is slowing production at a mine into which it has already invested $2.2 billion. However, the investment has already been made and cannot be recovered by producing diamonds in a weak market. By temporarily pausing production, De Beers can:

 

• Conserve cash
• Avoid adding to already high inventories
• Leave diamonds underground until prices and demand recover

 

The company has also said it intends to maintain its overall production guidance by relying on output from other operations while reducing costs at Venetia.